UniCredit sounds out bank interest in FinecoBank stake: sources

The logo of Unicredit bank is seen outside of one of its UniCredit unit Bank Austria branch offices in Vienna, Austria, September 18, 2016. REUTERS/Leonhard Foeger

LONDON (Reuters) - UniCredit (CRDI.MI) is holding informal talks with several banks to gauge interest in online broker FinecoBank (FBK.MI), hoping the Milan-listed business will be valued at no less than 2.5 billion euros ($2.8 billion), two sources said on Friday.

Italy’s largest bank, which is conducting a wide-ranging review of its global network, owns 55.4 percent of FinecoBank which has a total market value of close to 3.1 billion euros.

But this is seen as artificially high by bankers and analysts because the broker benefits from a favorable accounting and regulatory treatment of holdings of UniCredit bonds, which ICBPI analysts say account for 80 percent of its total assets.

A sale of FinecoBank would help UniCredit strengthen its capital and reduce the need for a share issue for new chief executive Jean-Pierre Mustier who is due to unveil a strategic and capital-boosting plan on Dec. 13.

Mustier wants to have a clear idea of how much he can raise from asset sales before pressing ahead with a share offer and the bank has invited a small number of Italian and international lenders to come forward with potential offers, the sources said.

VALUATION GAP

Those banks approached included Banca Generali (BGN.MI), Intesa SanPaolo (ISP.MI) and BNP Paribas (BNPP.PA), although the parties remain far apart on price, with initial tentative offers valuing the business at about 2 billion euros, one source said.

However, an Intesa Sanpaolo spokesman said it was not interested in FinecoBank, while officials at UniCredit, Banca Generali and BNP Paribas declined to comment.

There is no certainty of a deal, the sources said, cautioning that UniCredit is keen to maximize the value of its assets as it seeks to plug a gap in its capital estimated to be as big as 8 billion euros.

Assicurazioni Generali (GASI.MI), which controls Banca Generali is cautious about mergers and acquisitions (M&A) deals, one of the sources said, with little shareholder appetite for big-ticket transactions.

Analysts see a significant hurdle to a sale of FinecoBank because roughly half of its revenue comes from 9 billion euros in bonds it bought from UniCredit.

These are not risk weighted because UniCredit controls FinecoBank, and so do not count towards its regulatory leverage or risk concentration measures, analysts said, adding this would change under a new owner, potentially hitting the broker’s valuation.